The Pune Bench of the Income Tax Appellate Tribunal (ITAT) remanded the matter concerning the addition of Rs. 24,89,121 as gross receipts of commission income under Section 144 of the Income Tax Act, 1961, for fresh adjudication.
The assessee, Prakash Dipchand Kapadnis, an individual, did not file a return of income for the Assessment Year 2013-14 under Section 139(1) of the Income Tax Act, 1961. The assessing officer (AO) identified commission/brokerage income of Rs. 24,89,121 credited to the assessee’s PAN based on Form 26AS with a TDS of Rs. 2,48,912.
Law and Procedure for Filing of Appeals
The AO issued a notice under Section 148, but the assessee failed to respond. The AO passed a best judgment assessment under Section 144, taxing the entire gross receipts of Rs. 24,89,121.
The assessee challenged the assessment before the NFAC, arguing that only net income should have been taxed but the NFAC dismissed the appeal due to non-compliance with hearing notices.
On appeal before the ITAT, the assessee failed to provide supporting evidence either before the NFAC or the tribunal despite claiming that the AO erred in taxing gross receipts instead of net income.
The revenue’s counsel argued that the AO’s and NFAC’s actions were correct citing the assessee’s non-compliance and the lack of any material evidence submitted to counter the assessment order.
The single-member bench comprising Dr. Manish Borad (Accountant Member) observed that the NFAC failed to fulfill its statutory obligation under Section 250(6) of the Income Tax Act which mandates appellate authorities to adjudicate appeals by stating points for determination, decisions, and reasons.
Law and Procedure for Filing of Appeals
Citing the Bombay High Court’s ruling in Pr. CIT (Central) vs. Premkumar Arjundas Luthra (HUF), the tribunal explained the NFAC’s duty to address appeals on merits, even in cases of non-compliance by the assessee.
The tribunal remanded the matter back to the NFAC for denovo adjudication, directing to consider the appeal on merits and provide the assessee with adequate opportunities to present supporting evidence. The appeal was allowed for statistical purposes.
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